CNBC report: KKR looking to buy TXU

CNBC report: KKR looking to buy TXU

	Published : Sat, 24 Feb 2007 01:12 By : Agencies Print this Story

DALLAS (AP) - Private-buyout firms Kohlberg Kravis Roberts & Co. and Texas Pacific Group are poised to buy utility TXU Corp. in one of the largest private-equity deals ever, according to media reports Friday.

CNBC reported that TXU's board was expected to vote on a sale to KKR over the weekend and that an announcement could be made Monday morning.

The Wall Street Journal reported that Texas Pacific also was involved, and that the firms were preparing to bid at least $32 billion for TXU, which is the largest producer of electric power in Texas with some 2.3 million customers.

Shares of TXU soared on the reports. The shares gained $2.38, or 4.1 percent, to close at $60.02 in regular trading on the New York Stock Exchange, then surged more than 16 percent to $70 in extended trading after the reports that a deal was in the works.

The Journal said the buyout firms were expected to offer about $70 per share.

KKR and Texas Pacific representatives declined to comment. TXU officials did not respond to calls for comment.

TXU's market value based on its closing stock price Friday was about $27.5 billion. Except in the unlikely case that the buyers would get a discount for TXU, the price would exceed KKR's $25.1 billion purchase of RJR Nabisco Inc. in 1988.

Two weeks ago, another buyout firm, Blackstone Group, paid $23 billion for Equity Office Properties Trust in an all-cash deal.

TXU also has about $12.3 billion in debt that likely would be assumed by a buyer.

TXU is scheduled to report its latest quarterly financial results on Tuesday.

In late 2002, Dallas-based TXU was a troubled energy company that was forced to retreat from failed foreign investments. It sold off operations in Europe and Australia to focus on its home turf in Texas.

The results under a new chief executive, C. John Wilder, were impressive. The company's stock has risen about 10-fold since late 2002.

The company is currently embroiled in a $10 billion plan to build 11 new coal-fired power plants in Texas. Environmentalists and civic leaders in Dallas and other cities are fighting the proposal, saying the coal plants would add to air pollution. TXU says it would offset the pollution by reducing emissions from its plants 20 percent overall.

This week, TXU suffered a setback to its proposal when a state court judge blocked Texas Gov. Rick Perry's order to speed up the process of obtaining permits to build six of the plants. A panel of judged granted environmentalists' request to push hearings back by four months, until June 27.